The Rental Reform bill has passed (24 April 2024) its Third Reading in the House of Commons. The Third Reading is the last stage in the Commons before being sent to the House of Lords. Here we take a look at how the bill is shaping up and what happens next.
What are the notable amendments?
One of the key amendments is a new provision governing when tenants can serve notice after they have entered into an assured tenancy. The amendment would prevent tenants from serving a two-month notice to quit earlier than four months into the tenancy. The practical effect of this is to create a six-month period during which tenants cannot serve notice unless something goes wrong, - e.g. there is a serious case of disrepair the landlord fails to remedy.
This may at first seem a radical departure from the original draft bill under which tenants would have been able to serve notice at any point during the tenancy. In reality, it is a significantly smaller amendment when you consider today's market, in which increasing numbers of tenants are in fact requesting lengthier fixed-term tenancies to insulate themselves against market rent rises that are typically negotiated at renewal or on a new tenancy. By contrast under today’s law, the longer a fixed term tenancy the longer a tenant will pay the same level of rent.
Will tenants will actually be any better off in terms of their cost of living under the new law? We will have to wait and see. Under the bill as proposed, landlords will be able to propose increases in rent once yearly but that is no different to the law as it today in the case of statutory periodic tenancies, although under the new law there will be some slight tightening of the rules for this procedure.
The abolition of no fault (Section 21) notices
Long-since promised by this Government, and a major focus of housing campaign groups, the abolition of no fault (Section 21) notices is now expected to take place only after a review has been conducted into the ability of the court system to cope with the level of possession cases once the bill becomes law.
This is a sensible measure because it will prevent an already overburdened and creaky court system from having to absorb potentially far greater numbers of possession claims. However, it also means there is no precise date for a ban. Added to which, the Department for Levelling Up, Housing and Communities (DLUHC) has re-affirmed its commitment to giving six months’ notice before Section 21 notices are formally outlawed.
So, what now?
We’ve got an amended bill that has completed its stages in the House of Commons. The bill now moves to the House of Lords for a repeat of the stages in the Commons (first, second and third reading, etc) and during which phase the Lords will consider any amendments made in the Commons. Once completed, The Commons and the Lords will then debate the bill between themselves (a back-and-forth process aptly referred to as ‘ping-pong’) until agreement is reached about the amendments and the wording, after which the bill will receive Royal Assent and become law.
The bill will not come into effect straight away but as with all new legislation will do so on a commencement date and some aspects of the bill will be delivered in phases (not all tenancies will be subject to it immediately), and reviews of the court system’s ability to cope will be undertaken and reported on before section 21 is banned altogether.
The big question is when all this will be done and we can expect the new law? That’s still a difficult one. The government is committed to getting this bill passed and will need to do so before parliament is dissolved prior to a general election, the date for which is still unknown. You can track progress of the bill here and we will continue to provide updates on major milestones as when they occur.
Landlord Essentials is a series of articles where our experts delve into the big questions for London landlords. If you have a question on letting your property in London, ask a Foxtons expert. If you want help making your property a success, get in touch with Foxtons lettings team.
